Brambles First Half Report: RPC Business Continues to Grow

The Brambles RPC business continues to grow. Sales revenue in the reusable plastic container (RPC) segment was US$386.7 million, up 361% (349% at constant currency), reflecting the IFCO acquisition in March 2011. On a pro forma basis, assuming Brambles owned IFCO during the prior corresponding period, sales revenue was up 18% (15% at constant currency).

Increased penetration with existing customers, conversion of new retailers from disposable solutions to RPCs and new product expansion drove growth for IFCO in all regions. Net new business wins were US$15 million. New customers of note in the Americas included Safeway and Loblaw’s in Canada, Brookshire’s in the USA, Cercosud in Argentina and Sonda in Brazil.

On a pro forma basis:

  • Europe sales revenue was US$252.2 million, up 20% (16% at constant currency), on strong growth in like-for-like volumes and net new business in IFCO.
  • North America sales revenue was US$70.1 million, up 18% (18% at constant currency), as IFCO increased penetration with existing and new customers in the USA and expanded into Canada.
  • South America sales revenue was US$12.6 million, up 21% (19% at constant currency), reflecting IFCO’s new wins and increased penetration with existing customers.
  • The CHEP RPCs operations in Australia, New Zealand and South Africa continued to increase penetration, delivering sales revenue of US$51.8 million, up 13% (8% at constant currency).

Profit

RPCs operating profit was US$49.0 million, up 271% (255% at constant currency), including Significant items of US$5.2 million related to the IFCO integration. The operating profit margin was 13%, down 3 percentage points.
Underlying profit was U$54.2 million, up 311% (294% at constant currency), reflecting sales growth, US$10.5 million of costs from the amortisation of identifiable IFCO intangible assets, a US$5 million increase in depreciation costs as a result of the alignment of IFCO depreciation policies with those of Brambles, and logistics costs associated with the set-up of new contracts.

The Underlying profit margin was 14%, down 2 percentage points. Return on capital invested was 8%, down 9 percentage points, as a result of the changes to profitability and US$683.3 million of goodwill recognised on the acquisition of IFCO’s RPC business.

Cash flow

RPCs cash flow from operations was US$(20.7) million, down US$37.4 million, reflecting increased capital expenditure to support growth.